The key(s) to the Chinese market
What makes China's market different? What should I do to succeed in China? These are the million (or probably billion) dollar questions we are often asked. And since there is no simple answer here, we found it more engaging to throw back a few questions and get our clients thinking.
The tough question: What are you bringing to the market?
In less than 40 years, Chinese companies have moved away from copycat methods, have aggressively built up their manufacturing and marketing capabilities and click with consumers better than anyone else. During this time, China’s economy accounted for about 35% of global growth, attracting many international companies seeking fresh opportunities.
Today, all major international brands are present in China and consumers don’t lack any choice. This wide offering is accessible nationwide through a super efficient e-commerce infrastructure (more on that below). There were almost no branded products 50 years ago in China and we don’t see as much brand loyalty as in western countries. As a result, China is a super competitive market that calls for brands to clearly define their brand positioning and to live by it.
Is your brand young and fresh?
The fast rising standards of living have resulted in income and lifestyle gaps across generations. In a typical family, grandparents have grown up in poor conditions, with very little disposable income. Parents have embraced the emerging consumption society including disposable income, better accommodation and access to a wide choice of affordable consumer products. Their kids are poised to a better future, including widespread access to higher education and better healthcare and career opportunities. In other words, the challenges faced within only three generations could not have been more different. Things got significantly and visibly better in that very short period of time.
As a result, Chinese people are hopeful, believe in a bright future and celebrate youth. They embrace change and progress and relate to brands that capture those values. Brands need to constantly keep fresh and relevant to retain a share of mind.
Consumers expect brands to be “lively”, constantly launch new products, campaigns, promotion and communication. China’s most popular fast food brand KFC typically launches 60 new products every year – many of them during festivals or season changes. There is a clear premium for novelty; consumers will blindly try a new promotion or opening if this is the talk of the town.
In China, consumer brands tend to target much younger demographics. Young Chinese people have deeper pockets and can effectively bring new products and consumption modes to their elders – often in the form of gifts.
Give me an edge
From their youngest age and all throughout their life, Chinese people compete fiercely on the same criteria. Students compete to enter the best kindergarten, the best primary school, the best secondary school and eventually the best university in a nation-wide exam. Parents pressure their kids to access the quality of higher education they were often denied. This competitive spirit will underlie consumers’ behavior throughout their lives.
Chinese babies are fed infant formulas loaded with additional nutrients to get an edge on their development. Kids will sign up for extra courses that can grant them additional points in their exam. There is no space for leisure activities, personal interests or hobbies here – everything serves the purpose of competing in school exams.
This competitive spirit is then carried into their adult life. Cosmetic surgery is widely accepted and seen as a way to access a higher social status. Coffee was introduced in China in the 1980s and marketed to help consumers “get through the day” – another way to say “remain competitive”.
The brand messages along those lines tend to be very direct, logical and with immediate benefits. There is little space for a pun, humor or subtle hidden meaning.
Do you breathe success?
Competition is accepted because there is a reasonable expectation for success. Any success or achievement is to be socially displayed. On average, Chinese people spend more than 2 hours per day on social media, displaying (and often boasting) about their desirable lifestyle, recent purchases or food consumption.
Prestigious brands are a great vehicle for displaying this desirable and upscale image. They use celebrity endorsements in a massive way to boost their awareness and image. Brands need to be active on social networks, create messages and activities to be viral.
This ‘social validation’ can also drive their product design. We were recently asked by a resort to design an educational farm concept where kids and families could get time together in the presence of farm animals. We designed this experience starting with the “social media take away” and worked backwards from that. In this case, it was about delivering a polished custom video showing visitors enjoying the interaction with animals. We then designed the educational farm, experience, activities and supporting technology accordingly. This project boosted the client awareness and loyalty while displaying an upscale experience.
Educate and reassure your customers
Along with urbanization and the increasing income level, many Chinese are discovering new lifestyles and products. And as much as they like novelty, they still need to be reassured before opening their wallets, especially in the presence of imported products or new brands.
Brands will go the extra mile to get customers to try their product through free samples, referrals, promotions, and/or educational programs … Brands also need to display trustworthy corporate communication – mainly a visible website in Chinese and activity on Chinese social media.
Is your brand China-digital-ready?
Under government regulations and control, China has grown its own domestic internet and e-commerce champions and effectively developed an entirely different ecosystem. Google and Facebook are banned, Amazon is lagging. Local champions include Wechat, Weibo, Baidu, Alibaba, T-mall and dozens of other homegrown applications. The digital revolution has resulted in new services (shared bikes, 2nd hand market), changed lifestyle (home delivery), and opened a previously far away market to brands. But it also further nurtured competition between brands, and effectively transferred market power away to a few local e-commerce platforms.
The main features of the Chinese digital ecosystem are its penetration (across demographics and geography), its mobile capabilities (most search and purchases are conducted on mobile devices) and its convenience (promotion, social media and e-commerce platforms are easily connected).
We can now return better informed to our initial questions.
What makes the Chinese market different? What should I do to succeed in China?
China is a huge, fresh and super competitive market where smart customers will spend to display their success. In response, brands need to carve their position, align their marketing with local practices and execute their plans at Chinese speed. This is what we have been doing for 10 years now at Elson China.